I filed my taxes for the first time this year, and I did so using Web TurboTax. Just thought I'd share my experience, in case anyone else is wondering what it was like. What follows is a rather long-winded and somewhat verbose chronicle of my experience.

First I shopped around. There are actually several web sites which offer online tax preparation, among them Taxcut.com, Securetax.com, and WebTurbotax.com. I chose WebTurbotax because it seemed be the most cost-effective option. I was looking for a website which provided online, secure filing of both federal AND state taxes, for a low price or preferrably for free. All of these sites were secure; they all had 128-bit SSL encryption. From what I could gather, Taxcut.com allowed you to file a 1040 EZ online for free; however, to file for State (Virginia, in this case) you had to use their Taxcut State Edition software ($19.95 per state). Securetax.com allowed online filing of both federal and state returns. The filing fee was $9.95 for 1040 EZ + state, or $14.95 for 1040 (and associated forms) + state; they accepted credit cards for payment of fees. WebTurboTax allowed online filing of both federal and state forms; the pricing varied depending upon your filing situation. The filing fee was $9.95 for 1040 EZ + state return, or $19.95 for 1040 (and associated forms) + state return. HOWEVER, Intuit is also offering some charity program called the Quicken Tax Freedom Project, which works like this: if your adjusted gross income is less than $20,000, you can use WebTurboTax to file both federal and state returns FOR FREE. I knew (from looking at my pay stubs) that my AGI would be less than twenty grand, so I chose WebTurboTax.

Using WebTurboTax wasn't all that hard; it took only a couple of hours, and the hardest thing about it was staying awake (I was very tired at the time). WebTurboTax is a Java-based service (apparently, it downloads and runs a Java program on your computer); I found this out the hard way when I tried to access WebTurbotax when I had Java disabled on my browser. Moral of the story: enable Java before using WebTurboTax. Once I was in, WebTurbotax took the standard TurboTax interview approach, asking questions about my name, address, SSN, marital status, dependents, expenses, income reported on W-2 and 1099 forms, etc. I found that it was a good idea to have all of your W-2s and 1099s handy; it made the filing process a lot simpler. It probably helped that I'd read up a little on taxes prior to using the service (my employer took two months to mail out my W-2, so what else could I do while I waited?); I'm not sure how necessary this is for using the service, though. The online help section was, well, helpful; it had answers for most of the questions/problems/confusions that I encountered. I didn't have any investments last year, so I didn't get to check out WebTurboTax's features for handling the "pesky Schedule D;" I'll probably get some experience with this next year, though. State filing wasn't too bad either. It was the same Q&A stuff; the web site asked questions and I typed in the answers.

Miscellaneous notes about WebTurboTax. It allows you to stop, save your work, and sign off. So you don't have to do your taxes in one sitting, or even from the same computer. It also has an idle feature; if you let the computer sit idle for a set period, it kicks you off. However, it warns you about this beforehand, and gives you a chance to save your work.

WebTurboTax also allowed me to arrange for a direct deposit (ACH credit) of my federal and state refunds in my checking account. For this, I had to cough up my account type (checking or savings), my account number, and my bank's routing number. Not to shabby.

After everything was said and done, I was able to click a button and send off my electronic returns to both the federal and state tax authorities. I was also able to download PDF files containing electronic copies of my federal and state tax forms; saved these files and made printed copies as well. Included in the PDF files were copies of the 8453-OL forms. In most cases, the IRS requires that people who electronically file also mail in one of these forms along with your W-2 and other paperwork. As far as state goes, Virginia doesn't require that you mail in an 8453-OL form, so I didn't have to; your mileage may vary, depending on which state you live in.

Intuit has a web page which allows you to check the filing status of your returns. Once you electronically file, you must wait for your return to be accepted by the federal and state tax authorities; in each case, when your return is accepted, you are assigned a "declaration control number;" this goes on the 8453-OL form. It took only one day for my federal return to be accepted; that same day, I mailed in my 8453-OL into the IRS. Two weeks later, I checked my bank account and found that my federal refund had been deposited in it. My state experience, on the other hand, was kinda strange. Intuit shows the status of federal and state returns on the same page; when I checked my federal, it said that my state return was still pending. I check back a few days later; same thing. One week after filing my returns, I check my bank account and find a credit from the Virginia Department of Taxation for the amount I'd expected my refund to be; I check Intuit's page, and it still says my return is pending. Checked again the next day; same thing, return still pending. I figured it was a glitch in the system or something like that; but since the refund was in my account, I stopped caring about this rather anomalous situation. When I checked my return status a week later, after my federal refund had been deposited in my account, it said that my state return had been accepted two days before my state refund had been credited to my account. Go figure.

The proceeds from both of my refunds went into my S&P 500 index fund at the Vanguard Group (thanks for the investment tip, Gardners!).

Many people might have some doubts about the security of filing over the Internet. I'll admit, the first time I bought over Amazon.com, I was a little nervous; but I rapidly learned that it was at least as reliable as giving your credit card to a salesperson at a checkout counter. Same goes for online filing. Is it totally secure? No. But done correctly, it's at least as safe as filing via snail mail. First, online filing, if provided by a reputable site, is generally a safe endeavour. Your data goes from your web browser to the online filing company's computers, and from there to the IRS's computers. IIRC, the online filing company's computers must meet security standards set by the IRS. As far as sending your information over the Internet, it's okay so long as you use strong enough encryption. What you want is 128-bit encryption; it your web browser doesn't have it, you can get it from your web browser manufacturer's site. Also, if you're using a computer that other people have access to, it's probably a good idea to close down your web browser after signing off of WebTurbotax (or any other online filer); this is to prevent other people from accessing your filing information. Is it 100% safe? Of course not; nothing is. Is it 99.999% safe? I think so; I'd bet my tax refund on it, given the right equipment. Then again, just how safe and secure is a paper envelope? Against a malicious, determined thief armed with a butter knife?

Well, there you have it. If you have any questions, feel free to email me or post them on this board. If anyone else has stories about filing with other online filers, or with any of the major tax preparation software packages, I'd love to hear them. Horror stories too, so we can know what to steer clear from in the future.